The Maryland Court of Appeals handed down a victory to the welding industry on Jan. 6 in a ruling that said business insurance pollution exclusion clauses do not apply to liabilities that may arise from the uses of welding rods.

The Maryland court said insurance companies have an obligation to pay the costs to defend and resolve claims that involve welding products supplied directly, or through distributors, to welding shops.

The court limited the scope of the pollution exclusion clauses in typical business insurance policies to traditional environmental pollution, and said they do not encompass welding rod liability. It based its decision on the historical development of pollution exclusions.

"This case is critical to any company facing insurer arguments that pollution exclusions in commercial general liability insurance policies preclude insurance coverage for nontraditional environmental liability," said Katherine J. Henry, an attorney at Dickstein Shapiro, "The broad and definitive ruling rejects insurers' unwarranted claims that pollution exclusions should be read broadly to eviscerate insurance coverage for normal industry activity."